By Ethan Pezeshki

Ever wondered how countries are really doing? Well, let’s see who’s killing it in the global economic game.

Japan was the world’s second-largest economy behind the U.S., until it was overtaken by China in 2010. Recently, on February 13th, 2024, Germany overtook Japan as the world’s third-biggest economy, due to Japan’s economy slipping into a recession. In 2023, Japan’s GDP (gross domestic product) was $4.2 trillion in dollar terms, while Germany’s stood at $4.5 trillion. In fact, the yen declined more than 18% against the dollar from 2022 to 2023. This drop was mainly due to the Bank of Japan (BOJ) maintaining negative interest rates. In contrast, Germany’s euro remained relatively stable against the dollar.

Both countries are currently facing labor shortage issues, lower birth rates, and aging populations. Japan, however, has had a worse situation as it witnessed a contraction for the last two consecutive quarters, meeting the technical definition of a recession. Japan and Germany, with their relatively high populations of 125 million and 83 million respectively, are known worldwide as exporters of high-end manufactured goods, especially in the automotive sector. That’s why they are both economically high, contributing significantly to their global economic influence and standing. 

Germany’s pivotal shift in economic rankings reveals the ever-changing dynamics of the global economy. Indeed, India, with its vast population of 1.4 billion people, a significant proportion of whom are under 35, is poised to surpass Japan and Germany by 2030.